Date night from hell looms for Apple as Netherlands says: 'It's not me, it's you'
Watchdog reportedly well and truly out of love with App Store concessions and fee cuts
Apple's amended App Store rules for dating apps in the Netherlands reportedly remain anticompetitive in the eyes of the Netherlands' Authority for Consumers & Markets (ACM), raising the possibility that further changes will be required.
Bloomberg says it has seen an unreleased confidential decision from the Dutch competition watchdog that found Apple's rules unfairly target companies offering subscriptions through App Store apps, such as Match Group's Tinder dating app.
The Apple decision – part of a legal dispute with the ACM dating back to 2021 – reportedly says that Cupertino's rules harm makers of subscription-based apps "by charging them an additional and inexplicably higher fee," according to the report.
A spokesperson for the ACM told The Register that the agency could not comment as the matter is still pending.
With exceptions noted below, Apple takes 30 percent of the price charged for apps and in-app transactions for iOS, iPadOS, watchOS, and macOS apps. Those apps are only available through Apple's App Store. Subscriptions sold through apps require a 30 percent fee for the first year and 15 percent for subsequent years.
In the face of increasingly loud objections to its fees from third-party developers, Apple in November 2020 introduced an App Store Small Business Program that allows businesses making less than $1 million annually to pay a reduced 15 percent App Store commission. Google said it would match this move in October 2021.
Free apps in Apple's App Store pay nothing, though developers attempting to monetize free apps with ads lose a portion of any ad revenue to intermediaries.
Two years ago, the ACM forced Apple to reduce its commission – by three whole percentage points, but only for makers of dating apps in the Netherlands. It also required Apple to drop its anti-steering provision that forbids developers of dating apps from informing users about third-party payment options.
The decision reported by Bloomberg suggests Apple's changes still fall short of what Dutch law requires.
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Back on August 24th, 2021, the ACM ruled that the conditions Apple imposed on dating app providers were unreasonable and represented an abuse of the company's dominant position.
The government agency determined that developers of dating apps should be allowed to integrate other payment mechanisms for in-app content transactions beyond Apple's own in-app purchase system. It also objected to Apple's anti-steering provision.
The ACM also raised a third confidential objection that is yet to be disclosed, and which appears to be related to the unreleased decision and the source of Apple's objections.
At the time of the 2021 ACM decision Apple filed objections and sought an injunction to block the regulator’s requirements and fines for non-compliance. By December 2021, the Rotterdam District Court mostly rejected Apple's request and the ACM began assessing periodic fines of €5m ($5.5m) per week, up to a maximum of €50m. Apple was charged the full amount – a not-very-painful sum for a company that brought in almost $400 billion in 2022.
But while the legal dispute dragged on, Apple introduced changes to its StoreKit API to allow external payments in the Netherlands.
"Consistent with the interim relief ruling of the Rotterdam district court, dating apps that are granted an entitlement to link out or use a third-party in-app payment provider will pay Apple a commission on transactions," Apple explains in its documentation.
"Apple will reduce its commission by 3 percent on the price paid by the user, net of value-added taxes. This is a reduced rate that excludes value related to payment processing and related activities."
Dating app makers can therefore integrate a third-party payment mechanism via the StoreKit API and pay 27 percent instead of 30 percent, though they're on the hook for "the collection and remittance of any applicable taxes," such as the Netherlands' value-added tax (VAT).
Apple also extended this concession to any apps that use a third-party payment provider in South Korea and any apps in Russia that offer an external purchase link, the result of legal requirements in the respective countries.
In early October, the ACM disclosed that it had determined on July 13 that Apple's objections from 2021 are unwarranted and confirmed the required penalty payments. The agency said that while Apple has moderated its in-app purchase limitations and its anti-steering provision, the third undisclosed matter at issue has yet to be resolved.
The ACM has posted a summary [PDF] of its decision. Presumably Bloomberg has viewed the actual unreleased decision that reveals the third element of concern.
"Apple has already filed an appeal against the [July 13, 2023] decision…," the ACM said. "If the judge in the proceedings on the merits rules in ACM’s favor, ACM will enforce and publish the stayed part of the decision."
Epic Games tried to obtain concessions similar to those demanded by the ACM – but for all apps instead of just dating apps – in its mostly unsuccessful 2020 lawsuit against Apple in the US. In that case, Epic won only the right to inform customers about payment options outside of apps, and Apple has asked the Supreme Court to review that decision (after Epic Games had its petition to the Supreme Court denied) in August.
Earlier this year, the European Commission reduced the scope of its inquiry into Apple's App Store rules, which remains focused on how Apple's anti-steering rules affect music streaming apps.
Apple did not respond to a request for comment. ®